Robinhood Sued by Family Whose Son Killed Himself After Believing He’d Lost at Least $178,000

A 20-year-old died by suicide last summer after believing he lost more than $730,000 in the market using the trading app Robinhood. Now his family is suing the app for “misleading communications.” 

In their lawsuit filed Monday, Alex Kearns’s family are alleging wrongful death, negligent infliction of emotional distress, and unfair business practices on Robinhood. The lawsuit alleges that the company has predatory tactics that the family says targeted new users. According to the lawsuit, Kearns was unable to contact anyone at the company after he made an options trade that allowed him to buy $700,000 in shares.

The app then restricted his account and asked him to pay more than $178,000 within seven days to offset his trade. He unknowingly had other options to cover this trade, but thinking his family was going to owe $178,000 they didn't have, he rode his bike in front of a train.

“This case centers on Robinhood’s aggressive tactics and strategy to lure inexperienced and unsophisticated investors, including Alex, to take big risks with the lure of tantalizing profits,” the complaint said. “By marketing its online trading platform like a video game, it implied that trading stock and options was a fun way to make money, perhaps even to get rich, without significant risk.”

The lawsuit condemns Robinhood’s encouragement of options and margin trading, saying, “The problem with Robinhood’s targeting inexperienced and unsophisticated users is that these individuals lack the resources, insight, and knowledge that professional traders have amassed throughout their careers.”

Robinhood released a statement in June saying it is committing more resources to education and UI that encourages communication and transparency. Last month, the company restricted trading on GameStop without warning after Redditors short-squeezed the stock. 

The lawsuit calls Robinhood’s tactics “reckless” and that they directly lead to Kearns’s death in June. It claims the app’s misleading and convoluted literature is not isolated to this incident. 

“Though Alex’s panic and confusion were clearly caused by Robinhood’s misleading communications, Robinhood was impossible to reach at the most critical moment to repair the damage it had created,” the lawsuit says. “At that point, Alex believed that he was obligated to repay the deficit in his account and feared that his family would somehow get stuck with the obligation unless he did something drastic to protect them. He was in a complete panic.”

Still, the family said they’re hopeful the lawsuit will bring recognition to predatory investment practices—like permitting option trading, a particularly risky type of investment, for new users. Kearns’s father,  Dan Kearns, said his son was new to stocks and was using money from his birthday and his lifeguarding job, according to CBS. 

“All told, he might've had maybe $5,000 in his savings,” Dan Kearns said to CBS. "He thought he blew up his life. He thought he screwed up beyond repair.”

Robinhood did not immediately respond to a request for comment.

If you or someone you know is considering suicide, help is available. Call 1-800-273-8255 to speak with someone now or text START to 741741 to message with the Crisis Text Line.